BEIJING (Reuters) - It will be a "big mistake" for donors to cut funding to China in the fight against AIDS, the head of UNAIDS said Monday, rebuffing critics who say the world's second-largest economy should no longer be a recipient of such aid.

Several non-governmental organizations (NGOs) involved in fighting AIDS in China say they are facing more difficulties in receiving donations from developed nations because of the country's wealth.

"I think it'll be a big mistake for a donor and particularly, for anyone who's invested in China today, to withdraw, for the simple reason that this funding is a catalytic fund," Michel Sidibe, executive director for the Joint United Nations Program on HIV/AIDS told Reuters in an interview.

Sidibe said the Global Fund to Fight Aids, Tuberculosis and Malaria was helping to bring innovation and make a difference in most-affected countries by establishing a new link among the government and civil society and NGOs to work together.

The Global Fund has approved funding of $947 million to China, of which $369 million goes to fighting AIDS.

The fund's chief said in April that donors' decisions to suspend $180 million of aid to the Global Fund could hit efforts to combat the diseases. Germany, Spain and Denmark temporarily stopped payments to the Geneva-based fund earlier this year after hearing reports donations had been misused.

Sidibe, a Mali national, is in China for the first meeting of BRICS health ministers, made up of emerging markets of Brazil, Russia, India, China and South Africa.

HIV/AIDS became a major problem for China in the 1990s when hundreds of thousands of impoverished farmers in rural Henan province became infected through botched blood-selling schemes. It is now spreading primarily via sexual contact.

Beijing was initially slow to acknowledge the threat of the disease but has since stepped up its efforts, spending more on prevention programs, launching steps to give universal access to anti-retroviral drugs to contain the disease, and introducing policies to curb discrimination.

But China has also been wary of AIDS activists who have agitated for the rights of AIDS victims. Hu Jia, an advocate of rural victims of AIDS, was released in June after serving three-and-a-half-years in jail on subversion charges.

Asked about China's tight controls on AIDS-related NGOs, Sidibe said Vice Premier Li Keqiang told him in a meeting on Monday that making "community-based organizations in the fight against AIDS...was an important transformation that China wants to see."

China, the world's most populous nation with 1.34 billion people, had 740,000 people infected with HIV, the virus that causes AIDS and 105,000 AIDS patients in 2009, state news agency Xinhua said, citing United Nations estimates.